Iron Butterfly Credit Spread Option Update - SPX 0dte | Stock Market || Axe Options

[Music] [Applause] hey everyone thanks for coming back to my channel as you can tell by the title this is a quick update on the iron butterfly strategy i made a video about a month ago i will link it here this is an advanced options trading strategy so as a reminder the iron butterfly is a credit spread that involves selling two at the money strikes a call and a put and buying two further out of the money strikes also one call one put equally distant from those short at the money strikes i usually do either 50 or 60 wide wings i mentioned that i opened a separate smaller account to track these more efficiently so let's get into the details of that now i have done this trade 24 times basically every spx expiry date which is usually monday wednesdays and fridays but that changes around the holidays so if you're looking closely at the dates that's why um so i've done this trade 24 times and i have won 22 times that's a 91 win rate not too shabby so if you want to know how to construct these butterflies please watch my other video um i feel like once you do them three four five times they're not that difficult to get the hang of and your broker should have a option for saving the order form so that you don't have to do the math every time who likes doing math every time all right let's talk about the winners as you can see i've been pretty mechanical about taking profit once i have entered the trade i almost immediately set up my buy to close order and i just leave it working so my morning flow is kind of this i wait for my entry once my order gets filled i double check the fill price i do the math i take away one dollar and sixty cents and i set up my buy to close order and i send it i quickly do the math for my upside stop level and my downside stop level and i basically just leave it alone i don't worry about it i don't stress about it i move on to other trades i help my members i don't micro manage this trade so the trade has very simple rules so i don't babysit it and i don't stress out about it one thing that i'm sincerely trying to work toward in 2021 is stress free trading i know it's probably not on most traders checklist when it comes to making money in the stock market but you know it's not fun for me to make money if i have to have an anxiety attack to lock in profits um you know i have kids to do that for me so yeah stress free trading okay let's look back at the spreadsheet you can see i took profits early on a few days i should start making notes about why but i believe it was because an hour had passed and i was ready to just take the risk off of the table lock in my profits and move on you know sometimes being in a trade longer just increases the risk and i don't want a winning trade to turn into a loser like that's the worst all right let's talk about the losers so even though i've only had two 500 is quite a big drawdown for a small account so i need to tweak that some i may take the average of my first say five losers and then just cut the trade when my loss column reflects that dollar amount um because 550 dollars is way too high but i also can't say oh i'll just cut the trade when my loss has reached 400 because some of these were at some point down that much before they turned back into profitable and winners not a lot of them but maybe two or three of them and so you know had i cut those two or three at four hundred dollars that would have changed the whole like landscape of my success so i also tried to identify what about these two days could have signaled to me pre-market that these were not good days to trade the strategy neither of these two days were significant news days december 21st there was an expected move of 39 points january 4th there was an expected move of 17 points so one is high and one is low so i can't really go off of that december 21st and january 4th were both mondays so there's that but often people will ask me okay what days do you just not trade this and um there haven't been any days where i didn't trade it except for biden's inauguration day which for the record it would not have worked that day and um a day where i didn't have wi-fi it was a monday um it worked that day and actually i put it on on tuesday the following day to kind of like make up for it and it did work so that's something else that i'll explore something else i'm exploring in another account a bigger account where i can take more contracts and more risk is running these on tuesdays and thursdays and i've been doing that with like i don't know maybe 70 success rate um and what i'll do is i'll take multiple contracts and then i'll cut the first two at the original profit target cut the third one at 200 the fourth one at 250 and then maybe let the fifth one run or if it retraces back to a lower profit target just cutting it at that time so there's definitely more profit potential in these also if you look at my spreadsheet from that was just yesterday february 4th um there was an outage with e-trade and you know neither of my entry or exit orders were getting filled right away um but when i had sent i got filled on my morning entry and then when i sent my exit order as i do always for the dollar sixty profit target um it just it got stuck in like a queue and it didn't fill for like 55 minutes and it just so happened that um the butterfly continued to work in my favor and it did fill at exactly four dollars lower than what i um had entered it at and that does happen often but it could have very easily gone the other way yesterday and then i would have had a big fat negative you know four hundred dollars to show so that was super frustrating with e-trade yesterday but you know it just happened to work out in my favor all right i'm going to share a video that i recorded about a month ago um i didn't record it for the intention of putting it on youtube but it's it's a good it's a good learning day so the first three quarters of this day is the perfect iron fly day you'll see where i took the first three off and then where i got greedy on the fourth one and i lost a bunch of money so yeah let's watch that friday morning i alerted this entry right at 6 33 i sold to open the iron fly at 13.50 and then at 704 i alerted my exit as i always do at 160. so here was my first exit the one that i alerted to the room so i took a second one off at this price or at this time for um 11 55 and then i took a third one off right here for eleven dollars so now at this point i'm up 605 dollars and i had a fourth one and i said you know what i'm just gonna let it run like i don't know what i was thinking i was thinking it was gonna be a flat day duh um so for the next two hours the iron fly con decays to about nine dollars so over here i'm up over a thousand dollars on the day and now i'm like doing the calculation to not close the iron fly to just let it expire and i was calculating to see how much uh the cash settlement would be whatever depending on where the strikes would fall so um obviously here the market starts to turn up so from right here my iron fly was worth about nine dollars here it had increased to 12 dollars here 13 or 14 here 15 and finally here which was my break even right my break even price was 37 16. sorry no that's not right on the upside it was 37.43 so that's why i cut it exactly here anyways i ended up taking a loss on it i gave back basically the entire day's gains i i think i came out ahead 85 bucks or something like that but i mean how incredibly stupid was that but i just wanted to record this to show that here it was the value was nine dollars and then here it immediately went back to break even so i lost 300 in value in just one five minute candle so yeah just putting that out there so yeah all in all a successful couple of months i'm really proud of this little account it's easy to grow it's easy to grow an account when you have a hundred two hundred thousand dollars but when you have a small account you're working with limited capital it's harder to make gains so i calculated my roi at 73 percent um i just took an average of the margin requirements since that's how much you have to fork over to get into the trade right and then divided it by my profit so 73 roi not too shabby especially given that this has been a pretty tumultuous couple of months in the zero dte world at least i think on my vertical credit spreads selling credit spreads out of the money um those have not been doing well so far this year i think i'm around maybe a 60 or 70 percent win rate so that is tough um and really discouraging but nothing in the stock market is easy you know and i don't expect that this strategy will always work this nicely so i can only trade the day in front of me and um do my best find my niche find my edge in my trading and you know trade small enough that i can continue to trade despite losers so thank you for watching i hope you found some value in this video like the video if you want me to do another update another month or two on this strategy you can always email me if you want to chat um otherwise happy trading guys thanks for watching let's learn and earn together thank you guys see ya

Channel: Axe Options

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Keywords: Axe Options, Iron Butterfly Credit Spread, Butterfly Credit Spread Option Update, SPX 0dte, Stock Market, Iron Butterfly Credit Spread Option Update, Iron Fly, Butterfly, Iron Butterfly Axe Options, 0 DTE option strategies, interactive brokers, income option trading, options trading, selling call options for income, Iron Fly options, spx options trading strategies, spx options day trading, spx options Axe Options, Stock, Market, SPX, Butterfly Credit Spread

Id: 1ycpJrgUzR8

Length: 11min 47sec (707 seconds)

Published: Thu Feb 04 2021